Global crude oil prices climbed above $116 per barrel on Friday as another attack on a tanker in the Strait of Hormuz heightened concerns over petroleum supply disruptions in the Middle East.
Brent crude oil, the international benchmark Nigerian crude oil, rose 1.98% to $117.15 per barrel during morning trading.
US West Texas Intermediate (WTI) crude increased 1.75% to $103.79 per barrel as investors assessed the possibility of further disruptions to oil production and shipments from the region.
The increase followed an attack on a tanker travelling through the Strait of Hormuz, one of the world’s most important shipping routes for crude oil and refined petroleum products.
According to the United Kingdom Maritime Trade Operations (UKMTO), a small boat attached explosive devices to the vessel, triggering blasts and a fire in its engine room.
The attack temporarily disabled the tanker, although the vessel subsequently continued its journey. The identity of those responsible had not been established.
The incident added to mounting security concerns surrounding the waterway, where repeated attacks on commercial vessels have threatened the movement of petroleum supplies.
Tensions intensified further after Yemen’s Houthi militants claimed responsibility for attacks on several Saudi Arabian oil facilities, including the Ras Tanura and Rabigh refineries and an energy installation in Abqaiq operated by Saudi Aramco.
The developments have increased fears that further damage to production facilities or shipping infrastructure could reduce the amount of crude oil available to international buyers.
Oil prices have remained elevated throughout October, with Brent heading for a monthly increase of approximately 13%, while WTI was on course for a 15% gain.
Both benchmarks were also positioned to record their fourth consecutive monthly increases.
The sustained rally reflects uncertainty over the Middle East conflict and the ability of major oil-producing countries to maintain exports.
Although diplomatic efforts involving the United States and Iran have continued, investors remain concerned that negotiations may not produce an agreement capable of reducing hostilities in the near term.
For Nigeria, the increase in crude oil prices presents both opportunities and challenges.
As an oil-producing country, Nigeria could benefit from stronger export earnings, higher petroleum-related government revenue and improved foreign exchange receipts if production and export volumes are maintained.
Higher international crude prices could also strengthen the earnings of upstream oil producers operating in the country.
However, rising oil prices can increase the cost of refined petroleum products, particularly where domestic prices respond to international crude and product markets.
This could place additional pressure on manufacturers, transport operators and businesses that depend heavily on diesel and petrol.
The impact on government revenue will also depend on Nigeria’s actual crude production, export volumes and the difference between market prices and the oil benchmark used in the federal budget.
Meanwhile, the threat to international shipping could increase freight and insurance costs, creating additional pressure on global trade and the prices of imported goods.
With security concerns around the Strait of Hormuz unresolved, oil markets are likely to remain sensitive to developments in the Middle East, particularly any further attacks on tankers, refineries or other energy infrastructure.
